After spending the past year at war with the U.S. Attorney's Office, Howard Gary has agreed to a truce; he will remain the government's star witness in the bribery case against former Miami-Dade County Commissioner Jim Burke, California financier Calvin Grigsby, and Burke's former chief of staff Billy Hardemon.

Of course, having the volatile Gary as a cornerstone of the government's case may be one of the riskiest propositions since Humberto Hernandez asked Jose Quinon to look after his wife while he was in jail. When Gary was first caught in a 1996 kickbacks-for-contracts scandal within Miami's city government, he was more than willing to save himself by cooperating with investigators. He quickly steered them toward wrongdoing at county hall and worked undercover to help build a corruption case against Burke, Grigsby, and Hardemon.

Gary was given only vague assurances that his clandestine endeavors at the county would be taken into account when prosecutors finally decided whether to charge him for his City of Miami transgressions. The bond underwriter and former Miami city manager had no choice but to trust prosecutors.

As New Times reported in January, however, Gary eventually grew cocky and demanded that the U.S. Attorney's Office guarantee he would not be charged with a crime. Prosecutors refused, and last year Gary's attorney sent a letter notifying them his client would no longer cooperate.

This past summer the two sides struck a new deal -- sort of. Under a new agreement with prosecutors, a copy of which was obtained last week by New Times, Gary still has only vague assurances his cooperation will be taken into account when prosecutors decide whether to charge him. In a Justice Department memo outlining a portion of the agreement, the government acknowledges that "on June 5, 1998, at a meeting between Gary and his counsel, and representatives from this office, Thomas E. Scott, the United States Attorney for the Southern District of Florida, orally advised Gary that upon the completion of his cooperation with this office, he would assess the nature and extent of Gary's cooperation and make a determination as to the disposition of Gary's case, which could include a plea to a felony, a plea to a misdemeanor, or no charges being filed."

Sources familiar with both agreements say this represents a slight improvement for Gary; under the original he was almost certain to be criminally charged. Prosecutors would then "reward" his cooperation by limiting his exposure to jail time. Now Gary could emerge without a glove being laid on him.

Another major element in this new agreement is use immunity, which means none of the statements or information Gary provided can be used against him. This perk may be extremely important, as Gary has detailed for federal investigators a litany of his illicit encounters with local politicians. But these details contain some serious inconsistencies.

According to a Justice Department summary memorandum, Gary originally told federal agents in 1996 he had given Burke $6000 in cash. Burke supposedly needed the money to buy a house. "[Gary] further stated that, although it was characterized as a loan, there was neither a note nor a loan agreement executed," the memo explains. "Gary further stated that he had not been repaid and did not really expect to be repaid."

Two months ago, however, Gary changed his story and told authorities he had actually made numerous payoffs to Burke over the years: "During the course of debriefings on August 5, 7, and 19, 1998, Gary told FBI agents that he made cash payments to Burke on several occasions in the following amounts: $1000 to $2000 after Burke's election to the county commission in 1993; $5000 in connection with a Merrill Lynch WASA swap transaction; and $8000 after another bond deal." Burke's attorney Ed Shohat says he is aware of Gary's allegations and claims they will work in the defense's favor. He refused to elaborate.

But Gary's statements went beyond Burke. He said he made illegal contributions to former Miami-Dade County Commissioner Art Teele's 1996 campaign for county mayor. "Gary also stated that he was approached by Arthur Teele, who asked him to donate $10,000 to his 1996 campaign," the memo notes. "Gary said he gave $5000 in cash to another person at Teele's request. Gary said he knew that the amount requested and subsequently given exceeded the campaign contribution limits and should not have been accepted."

Teele denies asking Gary for any illegal campaign contributions. "That is a categorical lie," he asserts. He says he may have asked Gary to help him raise money during his campaign, but nothing more.

Gary also admitted he once paid former Miami City Commissioner Miller Dawkins under the table. "Sometime in 1985, after Gary left his position as city manager for the City of Miami, he was contacted by Commissioner Miller Dawkins, who referred a lobbyist/developer to Gary for potential business opportunities," the memo states. "As a result of the referral, Gary was retained on a zoning matter and received a $1000 retainer. Dawkins supported the zoning matter, after which Gary paid him $500." Dawkins is currently in federal prison after pleading guilty last year to accepting $100,000 in bribes to rig a city contract.

One of the more interesting aspects of Gary's statements to prosecutors was his claim that his relationship with former Dade County Commissioner Joe Gersten was always ethical and completely legal. New Times has learned that part of a defense strategy for Burke, Grigsby, and Hardemon could include the claim that Gary and Gersten controlled the county's bond business in the late Eighties and early Nineties. Under this scenario, Gersten allegedly forced companies to hire Gary's firm, and in turn Gary paid off Gersten.

According to sources familiar with possible defense strategies, attorneys will argue that Grigsby refused to go along with this arrangement and privately complained to Dade Mayor Steve Clark, who helped set up a meeting between Grigsby and an FBI agent. Grigsby agreed to cooperate in an investigation of Gersten and Gary, but the case went nowhere.

"As previously disclosed to counsel for Calvin Grigsby, the FBI and the United States Attorney's Office ... opened an investigation in the early 1990s into whether there was a corrupt relationship between Dade County Commissioner Joseph Gersten and Howard Gary resulting in his being awarded bond business by Dade County," the memo states. "The investigation in which Grigsby participated by providing background information and making recorded telephone conversations was closed without finding sufficient evidence of criminal misconduct.

"Howard Gary has been questioned extensively on this matter, and he denies ever giving Gersten anything of value in exchange for county business or in connection with the performance by his firm involving Dade County. However, after Gersten's resignation, Gary on his own gave him approximately $7000 to $8000 in cash."

Grigsby's attorneys are expected to claim that this experience affected the way he dealt with Gary in future transactions. Believing Gary was beyond the reach of the law, Grigsby may contend, he felt powerless when Gary demanded to be part of a multimillion-dollar deal to refinance bonds at the county's recycling plant. Grigsby reluctantly went along with Gary's demands, the defense team may argue. When Gary was caught by FBI agents in the City of Miami kickback case, defense attorneys could argue, he cut a sweetheart deal with prosecutors and set up Grigsby, Burke, and Hardemon.

Defense attorneys are also expected to attack Gary's mental state. The Justice Department memo notes that "Howard Gary has been under a medical doctor's treatment and supervision since 1990 for depression. As treatment for his depression, Gary has been prescribed Prozac and Zoloft at different times since 1990.